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tv   Representative Tom Price Delivers Remarks on Federal Spending  CSPAN  December 4, 2016 3:48pm-5:22pm EST

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is that protectionist or not? would be compliant with the wto? for those of us with gray hair, ruledember when the wto against provisions of our tax code and we eventually were forced to change it. is this a path under wto even though it is a corporate tax structure? we have to think about these issues. what worries me -- the one thing i really fear for fiscal policy is having a value added tax on current income tax and in effect, the destination-based order adjustable cash flow tax you have an brady's plan is not that, but it's not that because wages are did. but if the wto rules against it, i worry with politicians in washington, especially if they are not as good as the ones we hope for now -- so this would happen five years in the future
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by the time these cases get process for the debbie g oh, what happens with the politicians in the future might not have the same interest in limited government and good tax policy? they get the wto decision and they say be simplest way to deal with this is make wages no longer deductible. even though it's a subtraction method, debbie geo would probably approve it, and that, of course, i think you might as well fold up shop. thechance of controlling size of government would be very, very low. this is something i think we need to seriously think about. also, we have to think about the implications for tax competition, which i think is one of the few good things on our side controlling the greed of the political class. the better way plan in some sense is based on a plan that was published by the center for american progress, which is not exactly an organization that is friendly to limited government and low tax rates. the very first subtitle was "avoiding the race to the
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bottom." and that is a term that the left uses because they don't like tax competition. ireland cut taxes. other countries had to cut taxes. i think that's wonderful. the left uses it as the race to the bottom. have awants to destination cache flow tax. that suggests to me we ought to be very careful about doing this. if people who do not like tax competition what that approach, that worries me a lot. by the way, i do not want to get into technical, boring tax things, but this is a destination-based system which is the same thing that underlies the so-called streamlined sales tax proposal, the internet sales tax cartel that states want because they don't want tax competition. differentvery new, thing and i think we need to think about whether or not that would be good in the long run. -- then to the final point
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when you do a destination system , in effect the goal is to maximize the taxes paid by americans. politically it just doesn't make sense. i wonder about it. and the other political thing i wonder about, normally, all of the things been talked about with these various tax reform plans, lower rates, less taxation, territoriality, these are things the business community can be completely united behind, but when you do the destination-based cash flow tax, you are saying to every company that does a lot of importing -- think about walmart or something like that -- you are going to make my very strong opponent, i assume, the plan. and if republicans are doing something where you have to go up against the left, go up against the media, go up against a lot of opponents fanning the flames of class warfare, g really want to have part of the business community against you? i think the better way plan is great. i think it's the best thing to come out of congress and a long
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time. i think there has been a huge amount of very serious, good work on on it. but when we are thinking about melding the better way plan with the trump plan, i do worry about this one provision, because i don't know that enough thought has been given to it. everybody else cover the main things about increasing rates, less double taxation. i thought i would close up by raising a few warning flags. this is something we need to think about. thank you very much. dan.ank you, jason, do you want to say anything, one or two minutes -- three, in response to anything the other panelists said? yeah, and no disagreements. growth ofolling the spending, he's absolutely right. i ignored it in the sense of looking at what is good tax reform, but because betting is so high, one of the opposition
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complaints is, it does not raise enough revenue. the only way to raise revenue is to raise spending. dan is right, we have to get spending under control so we can remedy for government. the things wee want and i have overspending. dan is completely correct on that. he also mentioned something about the fisk. i have less gray hair, but i still remember what that is pure the foreign income sales corporation. the idea was you would set up a subsidiary in a tax haven with a lot of sunshine and you would convert your sales to get a lower tax rate. .nd it was called going fiscing like you were going on holiday. is found not to be wto compliant. the whole point of why that was being done was the u.s. tax rate was too damn high.
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you give corporations and in incentive to lower the tax rate in the u.s. one more point and then i will turn it over -- steve mentioned will go about how much into these tax reform plans of the go in a different direction. some criticism of dynamic versus static modeling. don't worry about it. get it out of. . we know right now the baseline we are going under a wrong. we see a declining labor force participation, so wages are going down. we see corporations leaving the united states. that takes tax revenue out. these baseline assumptions we have are wrong.
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steve is right and his model is right. we will get better growth. we will turn around the problems we have now and reversed the declines. hopefully get more work, more investment savings. let's not focus on whether dynamic or static is right. we know that static is wrong. fromer the model is going 1.5% to 3%, we are declining. steve -- some of us have enough gray-haired to remember -- [laughter] the income sales corporation. >> the bulk of the growth from the blueprint is going to come from the expensing followed by the rate reduction. added philip you get from the border adjustment is perhaps to press worthwhile
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for if you're getting a lot of pushback and someone causes you trouble. i would not worry too much about it. but dan is right to raise the question. is this going to be wto acceptable? the spending side is critical. we are wasting a lot of resources spending on junk. the infrastructure notion that this well counter us in the short run and do a lot of good -- most of what we have to spend on infrastructure is maintaining what we already have. that is not adding to the capital stock. not in a recession. but we have been growing for number of years. we are at equilibrium. it's just too low. to get that fixed, you really in the enormous increase
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private sector. do the infrastructure only if it is going to yield a very high return because it's very important. build a bridge to somewhere and make darn sure you have done a good cost benefit analysis before you start. as we get more growth, some tubs of spending will decline. the number of people needing public assistance will go down. the people needing health-care coverage will go down as incomes go up. i think that something we need to take account of in addition to the enacted spending deductions. the model results are fairly dramatic, and some people think we can't get there from here because there will be enough saving to fund all of this added investment, but if you put this plan in place, there will be. the business tax cuts retain earnings. the lower rates encourage more people to save.
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the lower rates in courage more foreigners to invest here. we spend a lot of our savings lending to other countries and that can stay home . models that are constrained by arehaving enough savings close to god and me -- close to economy models and they are nonsense. you hear this. if the results of from a close economy model, the results are to be ignored. there are a lot of people who have left the workforce. we show a response based on the people who are still in. what if the people who are out come back in droves? we are about 7% below the trend rate of growth since the 1960's. the recessions have knocked us has and the week recovery
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not allowed us to get back there. we have never not gotten back there in the past. we have a huge amount of potential growth out there unutilized and we are only showing we are recapturing about half of it with these changes. i think if we made these tax changes and the regulatory changes, i think we would get the other 9%. we can do this. act and we house to need the administration to go along with it and we need the senate to not just sit there. >> i would like to say couple things and will move on to questions from the audience. dan is a very fine economist and sometimes he loses his way. i think everyone here probably can agree that rooting for the georgia football team is a mistake. even for a wayward youth.
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i wanted to say couple things on the destination principle aspects of this plan. first of all, i agree with what steve said is the most important thing by far are the expensing most important thing by far are the rate reductions and move towards expensing and that the border tax adjust captain issue be secondary importance. that said, he think it's significant important what, chairman brady has put together on the business side is fundamentally similar to the old flat tax with one difference. the way it treats exports and imports. and basically, the income tax taxes production in the united states and whether the goods are ultimately exported, and in some cases services, or sold in the united states, and if you produce things abroad and bring the goods into the united states, the income tax imposes
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no tax on the value added abroad. a destination principle consumption tax is different. it imposes the same tax on goods consumed in the united states whether they're produced abroad or produced in the united states and doesn't purport to impose any tax on goods produced in the united states but consumed abroad. the easiest example to see that is a sales tax, but european type credit invoice v.a.t.s are like that and so would be a subtraction method v.a.t. sometimes called a business transfer tax or business flat tax or business consumption tax. so the question becomes do you want to affirm production of -- overseas or do you want a set tax system that is neutral with respect to producing things in the u.s. or abroad? i think the answer to that is almost certainly you want a tax system that no longer encourages you to move production offshore
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and that you want a tax system that is neutral in that decision. and chairman brady is moving in that direction. dan is absolutely correct, i believe it was dan that said that, that this will be undoubtedly litigated at the wto. the wto draws the distinction on the economically irrational basis it's permissible to have a destination principle tax or a border tax adjustment if it's an indirect tax. and it's impermissible to have a bta if it's a direct tax. so indirect, direct, indirect it's ok. direct it's not. we know that an income tax is direct under wto decisions. we know that a credit invoice -type value added tax is indirect. we know a retail sales tax is indirect. we do not know ultimately what the wto would determine with respect to a -- type value added
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tax. this is an open question legally. the of economic question i think is different. so, the long and short of it is that i think dan is -- concerns on this matter are misplaced. i think steve's economic judgment, based on his model and the economic theory he goes into, is correct that it's of secondary importance, but not of any importance. there's a little point here, too. there's a lot of concern about trade. and i think everyone on this panel would agree that protectionist policies are economically destructive and counterproductive where you treat foreign production more adversely than domestic production, but bta enables people to address that concern politically in a way that's constructive and neutral between u.s. and foreign producers.
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with that, let's open it up to questions. we have time for a few questions if people have any. dr. mitchell: while we're waiting for a question, can i ask you a question, david? dr. burton: absolutely. dr. mitchell: if i'm a business and i want to buy an input from an american manufacturer, i get a deduction for it, which of course is proper because that's a business cost. but if i buy that same in you the from a foreign producer, i get no deduction at all. that's not treating equally. i mean it, why is that not just on the face of it protectionist that you have much worse tax treatment of foreign produced inputs than u.s. produced inputs? dr. burton: because the value of the good that was deducted has already been taxed, whereas the value of the foreign good produced has not been taxed by the united states. it would be as if you had a retail sales tax that said, if
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you produce something abroad, we don't impose any sales tax on it. but if you produce it in the united states, we're going to impose a sales tax on it. that's, in effect, what the current system does. and that's what any origin principle tax does. it. i mean, i assume you would agree that the business input had been taxed. dr. mitchell: well, it does ultimately come down to a debate over destination-based versus origin-based taxation, which would bore 99% of the people in the world to death. dr. burton: but it is very, very important. dr. mitchell: but that's why i raised it. i think it's important for our side to hash through these issues before we get too far down the path. dr. burton: and we will promise to do so, but i think the boring remark was correct. [laughter] we move onto the next question. we do have a question. tim: again, i'm tim brown, citizen taxpayer.
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can i address you, doctor, professor? dr. fichtner: whatever you'd like. jason is fine, too. tim: you made a comment in passing, and as a citizen taxpayer, i would say something back to you and to the heritage foundation as an organization with some political -- not political, some public policy outreach agenda. you said static scoring versus dynamic scoring, forget about that. and i would say don't forgetting about that. what you must not forget about is that in the public perception, you open up the newspaper, you read an article, and you say, "look what those idiots on capitol hill and the white house are doing. they're going to send us into deficit land forever and ever and ever and ever." and what's missed is the difference between static and dynamic scoring -- and i'm talking public outreach. i'm all on the side of dynamic scoring. i understand the issues, but in terms of outreach and public policy communication, i don't think one person in 100 understands the difference in how important that is.
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dr. fichtner: so, this is not a disagreement. i'm with you on the importance. the concern that i have is, you know, this town's a bubble. we've seen that from the election results that we're in a bubble. when you go outside and talk to the american people and start talking on the differences of numbers and static and dynamic, you have already lost them. what tends to happen especially with today's media, they'll find where the criticisms are and the differences and focus on that to disparage the entire plan. if you go out and say our job's going to create 4 million jobs, maybe it creates 3.5 million. it's not to say that the dynamic scoring of the model is wrong, but you're going to have people on the left with the tax policy center, people from brookings, center of american progress, they're going to come out if they haven't already starting to attack the tax foundation model and they are going to say it's wrong. not that the dynamic scoring is the wrong thing to do. now even tax policy center is
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going to have a dynamic model. but they'll start quibbling on the differences. so i want to focus on the fact that static is wrong and say the way we're doing things is wrong. we know static is wrong. it's wrong because they're not counting for participation or increased growth and because of that it's wrong, why is it wrong? because they're not counting for these things. the tax plans will fix this, and let's just go with that. that the american people understand. if we talk about static dynamic, we're going to lose them. dr. entin: 5, 10 years ago, the press was never picking up on the numbers. now they are. the house was not requiring dynamic scoring out of the joint tax committee. now it is. the closed economy models don't really work well, but they are trying. the treasury is trying. the press is on board. it's working. but there's another reason for looking at the dynamic numbers. it is not just to reassure the house numbers they are not voting for a big deficit.
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it's to teach them what the proposal is likely to do. if i have two proposals, one of which is not going to create growth and one of which is going to create growth, and they're both the same dollar amount statically, the house might think, "well, they're both equally good." but one is going to get you a lot more growth. and the dynamic scoring process which first has to calculate the growth will give them that information that they would not have if they just tossed out on a static basis and didn't look any deeper. we had almost every republican candidate coming to us to ask us to score their plans, not because they wanted our advice as to how to change their plans. we didn't push them around like that. we just said this is what we think will happen to your plan. some would then come back and say i want more growth than that or i want less costs than that. what if i substitute this provision for that provision? some of them came back 40 and 50 times. but it educated them as to what their likely outcome would be and they were able to target
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their growth and their budget hit more efficiently by using a model which gave them that feed back. i think that's one of the biggest reasons for doing dynamic scoring is to lead to the better policy. dr. burton: so it is called dynamic scoring -- reality-based scoring. in some respects, i think it is better than we're talking about it takes into account economic reality that tax changes affect economic. dr. fichtner: maybe that's a language -- we could start saying there's proper modeling versus improper. transparent versus misleading. if we do that, everyone will go that's what we should do. we will change our language. that's a good point. dr. burton: there's a question over here. >> return to the -- dr. burton: i don't think the mic is on. maybe i'm wrong. let's try that. >> yes. can you hear me? i just want to return to the foreign input discussion because i actually didn't find it
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boring. is a manufacturer who has a foreign input and pays a tariff on that input because there's no domestic source, how is -- i believe that would have a negative impact on them. say you've got a 5% tariff on an input. have you no domestic source. so now you're saying you would pay on that again. dr. burton: i am not sure i understand the question. >> so, you are a manufacturer in the united states and have foreign inputs. you pay tariffs on those inputs. dr. burton: no one's talking about a tariff here. >> but the tariff already exists. this bill is not going to get rid of foreign tariffs, is it? dr. burton: oh, i see what you're saying. you're saying the 5% tax isn't part of the internal revenue code but the part of the harmonized tariff schedule? so then what's your follow on question from that? >> so my question is, i believe that i kind of am agreeing with dan here, that foreign inputs if they are not treated the same as domestic inputs is not fair to
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domestic manufacturers who are trying to keep production in the united states. dr. mitchell: well, since david isn't jumping in, i'll jump in. i mean, that's one of the reasons why as i'm looking at this and i'm thinking, we have not paid enough attention to this issue, and we need to. now, it might be that as we go down the road, one month, two months that maybe my concerns will be eased, but right now, i just can't help but look at it if i'm buying from a supplier overseas i get no deduction, which means in effect the tax rate that exists is going to be akin to a tariff on that foreign input. >> he's already paying a tariff more than likely. dr. mitchell: yeah, but there will be a new tariff, which is akin to whatever the final corporate tax rate turns out to be. and i just think we need to -- those of us who want tax reform need to pay attention to this --
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when it looked like hillary was going to be elected, nobody really cared about these details because it was the house plan was simply a statement of principles. that's in effect all it was. now that all of a sudden this is a real issue and we might have a chance to do some real things, and by the way, you know, no matter what, 80%, 90% of what brady wants to do is going to be things i like. i'm just looking at this one provision and just worried, well, you know, maybe the trump -- trump's approach on this, even though he gets rid of deferral, which i don't like. maybe we can mesh the two plans and get rid of everything i don't like and have nothing but things i do like, which seems perfectly reasonable to me. dr. burton: i guess the problem , as you describe it, is the 5% tariff, and the tariffs vary depending on the source country and the product -- not the proposed tax treatment, which is to treat u.s. production and
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foreign production identically. instead of what is done currently, which is u.s. production is taxed and foreign production is not. so. dr. entin: part of the confusion in this area, and it's intense even among economists, even among very experienced professors at leading universities when they get together and talk about this, they get kind of jumbled up. it depends on whether you're looking at the taxes passed back to the producers or that's being paid by the consumers. and if you're only one country in the world, it doesn't matter which way you look at it. but if you've got more than one country, the starting point in your assumption where the tax falls can lead to opposite conclusions, which is why eventually the economists threw up their hands and said the so exchange -- rate comes out to be the same. now, in a situation where you have france and germany and they both have a v.a.t. of the same size, none of this matters.
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if you view it as being paid by the consumers, obviously it doesn't make any difference. it's a 10% tax on all the consumers in both countries. if you're thinking it's being regarded on the producer side, then if you've got the export from france and they forgive their tax, the germans impose the same tax on what is coming into germany, and it is the same thing -- producers in france and producers in germany are paying the same tax in germany. no problem, again. what you have here is a little different. you see, they have a corporate tax. it used to be the same size as ours or a little higher, and they had a v.a.t. on top of it. forgiving the v.a.t. on their export didn't hurt us. the embedded tax on their product and our product was the same. they've cut their corporate taxes and substituted an increase in the v.a.t. they may have an advantage there if you view taxes as being on the producer. it gives them a competitive advantage. if you view it on the consumer, it probably doesn't matter very much.
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if however, we take our whole corporate tax and convert it into what amounts to a kind of a vattish thing, then we are getting the advantage back on everything because we don't have a v.a.t. on top of the corporate tax. and they might look at that and say, "well, we'd have to abolish our corporate tax and enlarge our v.a.t.s to be everything in order to compete with what the united states has just done." to some extent, importers would feel some of that pain, too. so i need to think this true much more carefully than i've been able to do because this is confusing. which end is the tax get imposed on, producer or consumer? and it is complicated. you will have pushback from the wto. and dan's right, we have to think this through a bit more. but i'm sure there's an answer out there. i don't think we have it yet. dr. burton: unless you make extremely extreme, for lack of a better word, assumptions about elasticities, that the truth of
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the matter is the incident is going to be somewhat on the producers and somewhat on the consumers. and you wrote a very fine paper, i forget the name of it, on sentence analysis that people are interested if the subject might want to review. what's the name of it? dr. entin: it's in the heritage book public square private chamber, and it's also on the old iret website under bulletin 88. and i don't remember what i called it. dr. burton: there was a book that was a heritage book called "the secret chamber of the public square." you can buy it for $5 or less on and i don't remember what i amazon because there's a lot of used copies floating around. and it addresses a number of issues we've been discussing, one of which is incidents, another which is the dynamic versus static modeling, and also jason did a paper on distributional analysis. to those of you who want to take a deep dive into some of these things, that book is probably one of the best things out there. dr. entin: it is free at iret.org.
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dr. burton: oh, the paper? >> that's vicious price competition there. dr. entin: marginal cost electronically is zero. >> if you want the rest of the masterpieces, you have to spend $3 on amazon. >> it's a good book. dr. burton: any other questions before we close this out? our right -- alright, well thank you all very much for coming. this session is closed. >> always a pleasure, sir. >> are's kennedy school of politics hosted -- we will show you that form courtesy of cnn today at 6:30 and 9:40 eastern here on c-span. i decided to spend much more time on the young grant. i spent a week at this point trying to understand how this man could finish 21st out of 39
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at west point. therefore sometimes viewed by these biographers as a historical lightweight. if he said himself, i must apologize, i spend all my time reading models. announcer: tonight on q and a, ronald c white talks about the life and career of the 18th u.s. president in his latest book, "american ulysses." he could meet with african-american leaders and the white house one day. he said i look forward to the day when you can ride on a railroad car, when you can eat in a restaurant, when you can do so along with every other person regardless of the race. that they must come. it took 90 years for that day to come. grant was the last american president to hold those kinds of use. announcer: tonight at 8:00 eastern on c-span's "q&a."
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tom price of georgia outlined a proposal to make improvements to the federal budget process. this is about 90 minutes. >> good afternoon, everybody. i am a senior fellow and -- in economic studies here at the brookings institution. i want to welcome you all to brookings for this discussion on the reform agenda for the federal budget process. i want to remind you all that this is being webcast. so if you would just take a
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moment right now to either turn off your phone or silence it, that would be very much appreciated. we are pleased to be cohosting this event with the committee for responsible federal budget and the committee president will be moderating the panel that will take place in the second part of the program. members of the panel are also members of the national budgeting roundtable that meets here monthly. this is a bipartisan group of budget experts, former budget officials and political scientists who focus on the budget process and how to reform it, including how to achieve reform through the political process in itself. we do this because we, like most people, recognize that the budget process is a mess. it is a process marked by missed deadlines, by crises and deadlock. meanwhile, it seems to be unable to tackle many of the critical problems facing our country and
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pursuing our national goals. and this failure, i think, contributes to the profound, the public suspicion and distrust in washington we have seen in the election and before that. fortunately, some people are trying to do something about this. so i am delighted to welcome to brookings tom price, who is chairman of the house budget committee to keynote this event. this afternoon, he will be unveiling a set of draft proposals for a structural reform of the budget process. and the way congress enacts and puts into place budgets for the united states. chairman price is a physician. he has represented georgia's sixth district since 2005. and since january of 2015, he has been chairman of the house budget committee. as chairman, he has been
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strongly committed to budget process reform. in fact, in this congress, he has held nine hearings on the topic before presenting these proposals today, which involved dozens of witnesses. indeed, his strong commitment to budget process reform is why he is here with us today, despite having a few other things on his mind, as you might imagine. as you know, dr. price was nominated just yesterday to be the next secretary of the department of health and human services. dr. price, i know your schedule is very tight. you only have a short time with us today. i look forward to hearing your proposals on the budget process. thank you. [applause] dr. price: thank you, stewart, so very, very much. good afternoon, all. it is wonderful to be able to join you today.
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i want to thank the brookings institution for hosting the event today and thank the committee for as responsible federal budget for agreeing to cosponsor this event. the scholars at brookings and at committee as well as the national budgeting round table have been part of the driving force in this town behind an effort to reform the congressional budget process. i want to thank you so very much for lending your time and expertise and passion to this issue. budgeting isn't something that usually fills up rooms, so we're very excited today to have a full room. before i begin i want to mention three specific things, items. one, i want to thank all of my budget staff who is here, they've done yeoman's work and incredible diligence in producing this product, and among those individuals is my colleague, congressman todd rikita from the great state of indiana. former secretary of state vice chair on the budget committee.
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second, is that i have a terrible cold and i apologize for that, which is why i just did a todd rikita in slow motion. losenge in, and i apologize for that if i cough in the middle of it i will take a sip and put another one in. and the third is, as stuart mentioned, i received some interesting news yesterday that has changed my world and life and consequently my schedule. and so i'm really pleased and excited about being here today and presenting this, but i will not be able to stick around afterward for a q&a and i apologize for that. so we meet today less than one month after one of the most momentous presidential election outcomes most likely any of us have ever seen. a lot was said during the campaign and a lot was said about the campaign, but one of the biggest takeaways that i see is this, and that is that the american people want change. they want real change. the american people are fully
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aware that government as we know it is not working well and they want to shake things up in the system that we have here in washington. there are many reasons why, and no one person and no one party is responsible for the good or the bad or the ugly that we see coming out of washington. let me submit, however, that a large portion of the gridlock that we see here in congress between the legislative and the executive branches comes squarely from a broken budget process. the work is not getting done, it's not getting done on time, and certainly not in anything approaching an orderly or efficient or accountable manner. in the last five years, only one out of 60, one out of 60 appropriations bills has been passed on time. before the end of the fiscal year. the government has been fully funded only once in the past 20 years on time. to keep funding the government in 18 of the past 20 years we've
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relied upon year-long continuing resolutions, basically a stopgap measure where congress has adopted and the president has signed omnibus bills. this is when washington throws all of government spending into a giant package that is by design incredibly dense, challenging to comprehend in any expedient manner, and generally devoid of the level of transparency that the american people desire or expect. in short, no way to run a government. and it's occurred under republican control. it's occurred under democrat control, and it's occurred under divided government. it doesn't matter who controls the levers of power when the system is flawed. two years ago when i sought the chairmanship of the house budget committee, i made it known to my colleagues in the house of representatives that the overhaul of the 74 congressional budget act was an absolute priority. and to that end over these past two years, our committee has held as many as nine hearings on this specific issue.
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we have received testimony from over 30 witnesses. we've produced numerous working papers, white papers that many of you have seen, i trust, and that document the challenges that we face and the solutions that are possible. as members have become familiar with the process as it stands today, through the development of two budget resolutions and the ongoing appropriations process, there has been a near universal recognition that something has to change. at the core of our efforts have been six principles which speak to not only the failures of the current system that we aim to fix, but also to the additional successes that we aim to achieve under a new and improved budget process. so today, i'm excited to provide an update on the progress that we have made in our committee toward achieving a substantial overhaul of the budget process and to ask all of my colleagues in congress, our friends in the policy community, the think tank community who have thought long and hard about these issues and the american people at large to review the work that we've done and provide your feedback on these ideas.
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first, enhancing constitutional authority. fittingly we ought to begin any discussion on budget process reform where it all began -- our constitution. article 1 of the constitution gives congress the power of the purse. the authority to determine the federal government's level of taxation and of spending. over the course of many years and many congresses, through both republican and democratic >> we have given the president and their regime of regulators too much power which has weakened the representative framework of our democracy. this has got to stop. first and foremost when it comes to the budget of the united states congress should go first with its proposal under the budget process reforms that we envision, lawmakers will continue to consider a congressional budget resolution with information gained from a current services account estimate from the executive branch prior to the president submitting his or her request. timing may seem like a small distinction, but the current
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scenario where congress is essentially responding to the president's budget is completely backward and antithetical to the constitution's goals and framework. speaking of timing, with he ought to align our fiscal year with our calendar year. that means that january 1st is when it would all begin, that will better reflect the schedule of congress and provide policymakers with more time to get their work done. further, we propose putting in place a plan to reduce spending on unauthorized programs. a substantial portion of federal spending goes to programs and agencies that congress has failed to authorize for years, sometimes even decades. that's a fundamental failure of oversight. if congress wants to spend money on an idea or an agency or a program it ought to explicitly and in a timely manner declare and justify its intention to do so. within this same framework falls the annual appropriations process and changes to the timing and design of how we keep
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the government regularly funded. passing 12 individual appropriations bills all the way through congress has, as i stated earlier, failed to occur rather consistently for quite some time. one solution that's garnered rather popular attention and a claim is the idea of buy annual bi-annual budgeting. spending the first year of congress dealing with budgetary matters and authorizing spending for two years so that the congress can spend more time on the oversight in the latter half of two-year cycle. biannual budgeting while a popular concept i don't believe will solve in and of itself all of our budgetary woes, however, the concept has received broad bipartisan support. what we propose is dividing 12 appropriations bills into two tranches, six in the first year, six in the second year of the congress. each funding government functions in their yar on a biannual races.
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we ought to see how it works and reevaluate at a later date and that review process should include the requirement that the governmental accountability office prepare a report on the effectiveness of the biannual budget process. meanwhile, a prohibition on long-term continuing resolutions is an absolute must. congress should never forfeit its budgetary responsibilities by passing a stopgap measure that covers more than a year of governmental activity. at the same time, congress ought to expand the use of its budgetary authority by allowing for multiple reconciliation bills to be considered under a single budget resolution. increasing the opportunity for policymakers to pursue major multiple major reforms within each of the three reconciliation categories of spending, revenue and debt. second area, strengthening budget enforcement. of course a budget that is not enforced is worth less than the paper that it's printed upon. right now, budget rules and
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restrictions are easily circumvented often through , gimmicks or outright waving of enforcement measures. we should empower policymakers to prohibit such actions. there should be unequivocal opposition to any efforts by congress to use gimmicks to declare it is offset spending when it's done little more than clever accounting. we have to eliminate the opportunity for congress to pursue spending and tax legislation when there is no budget in place. this not only makes sense from a budget enforcement perspective but it also helps ensure that congress is exercising its responsibility to establish broad fiscal policy in line with the priorities adopted by congress. however, there could be no real budget enforcement if too much of the spending is outside of the purview of the budgeting process. congress needs to look at the whole picture to it has a -- the whole picture so it has a complete understanding of government spending and obligations. at the same time we should , broaden the pacebase of programs subject to automatic budget enforcement procedures
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and funding for emergencies should be truly that, funding for an emergency, for a defined relatively short amount of time and not become a long-term line item in the budget. third is reversing the bias toward higher spending. one of the more fundamental challenges that we face under the current budget process is the inherent bias in the system for ever higher spending. the baseline that congress uses for its budget projections, the amount against which any change is measured or compared assumes that government programs which are scheduled to expire and automatic spending programs like medicare which are headed for insolvency are simply a part of permanent spending obligations and therefore do not have to be accounted for or subject to the same level of scrutiny as other federal spending measures. meanwhile, programs funded annually through the regular appropriations process are automatically assumed to be given a pay raise due to inflation. this assumed automatic plus up is unnecessary and the baseline shouldn't pre judge congressional decision-making on spending
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increases. what is necessary for all lawmakers to consider is the cost of not just implementing a given program but the cost of borrowing, if need be, to find that program. right now interest payments on , the government's debt is completely missing in the cbo cost estimates of new legislation and we think it's important to change that. additionally committees , considering legislation that will have an impact on the nation's fiscal outlook ought to have the estimate of the impact of that legislation in hand before they go to mark up or approve or disapprove the legislation. quite often members don't have , that information available to them on the costs of the potential legislation until it's too late in the process. fourth, controlling automatic spending. for all the time and attention that they receive the appropriations bills that congress is supposed to pass each year represent only a fraction and it's a decreasing fraction of the government's annual spending.
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two-thirds of current expenditures are dedicated to a relatively small number of automatic spending programs on the mandatory side like medicare, medicaid and social security and other mandatory programs which are not subject to annual appropriations and, therefore, operate largely outside of the control of congress. in a few short years, over 75% of the annual budget will be consumed by automatic spending, meaning that congress will have less and less control over the spending that occurs. that means that the american people will have less control over how their hard earned tax dollars are being allocated. this is unwise, it is irresponsible and it's sustainable. to establish control over this spending, first and foremost we ought to prohibit congress from creating new automatic spending programs that are not included as part of the annual budget resolution. this doesn't preclude congress from at some point agreeing to create a new automatic spending program, but it would ensure that the conversation begins within the context of a budget and the nation's fiscal health.
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right now there exists no , reputable process in place to establish enforcing spending limits. sure we've got the statutory caps that are in place right now on discretionary spending but they are not part of any long-term strategy for economic growth or for national security. meanwhile, we have uncontrolled automatic spending programs that are eating up an ever increasing percentage of yearly annual tax revenues. it's an unsustainable trajectory. we need a system that gives congress the opportunity to establish spending limits and to put those limits into law. and to do so within the construct of the annual budget resolution. when congress adopts a budget resolution to govern its appropriations process, there ought to be a way to spin off or an opportunity to send to the president for his or her signature a joint resolution that would put in law limits on spending based on the parameters that are established in that budget resolution. one way to lessen the burden automatic spending a placing on
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-- automatic spending is placing on our budget is to bring back more programs under the umbrella of annual appropriations process. this could be done by establishing a commission similar to the military's base realignment and closure or brac commission that would evaluate each automatic spending program and which ought to be transferred over to the discretionary side of the ledger. congress would have an opportunity to vote up or down, for or against the commission's recommendations. in each of these instances congress, the people's representatives would have a say in the treatment of our automatic spending programs. that really is key since many of these programs are critically important to the health and economic security of the american people. fifth, increasing transparency. nothing says good government like transparency. a little sunshine. a representative democracy must be open and accountable to the people and that's why in our budget process reforms we put a premium on transparency. the american people should know where their tax dollars are being spent and they should not
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have to be a budget analyst to figure it out. the congress and the executive branch should provide a description of their budget to the general public in language the general public in language that is easy to understand and and scrutinize and searchable. we also believe in bringing the facts to congress so that it acknowledges the reality of where our nation stands from a fiscal standpoint. that's why the reforms that we are proposing would require the comptroller general of the united states to deliver an annual fiscal state of the union. address to congress and the country so that we are all provided with regular updates on the significant challenges from a fiscal standpoint facing our nation. transparency should also flow to those that are developing and implementing regulations. every administration relies on regulations to implement its agenda and support the legislative work of congress. moving forward, however, we ought to account for the impact of those regulations and that's why we're calling for a regulatory budget to catalog the
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cost of proposed regulations and the aggregate impact of the regulatory state on the health and well being of our nation. and then finally ensuring fiscal sustainability. while the budget process is in on the surface about the year to year funding of the federal government's operations and agencies, the ultimate goal of any budget ought to be long-term financial stability. putting our nation on a financial trajectory that will ensure future generations inherit a country that is fiscally sound, economically confident and globally competitive. short sided thinking or short term solutions will by definition fail to get us there and that's where we currently are. that's why a new budget process ought to ensure the relative long-term fiscal health of the country by focusing on the nation's debt obligations over the coming decades, specifically we ought to adopt a series of long-term declining debt targets enforceable by enhanced reconciliation.
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should that fail there must be an automatic enforcement mechanism so that we're putting ourselves on a path to ensure that we leave our kids and our grandkids a brighter future. the changes that are needed can be as simple as implementing a rule in law against increasing long-term spending to the more complex reforms like requiring risk-based discount rates when evaluating the government's credit to insurance programs or to the revolutionary idea of changing the debt limit calculation to not a dollar value as a limit, as it is today, but the level of debt as a percentage of the economy as a percentage of the gross domestic product. short sided thinking in washington is one of the biggest threats to ensuring a sustainable healthy fiscal outlook. anything and everything that we can do within the budget process to force policymakers to consider the long-term consequences of their actions and their decisions will go a long way toward ensuring america is a vibrant economy and a
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secure future. for all of our efforts to incorporate the input of members and policy experts from outside congress, we recognize in this process that there will be other solutions that could contribute greatly to improving the nation's fiscal outlook and that's where we propose establishing a special commission tasked with reviewing different budget concepts so we are incorporating an outsider perspective into the conversation. specifically, such a commission would examine and report to congress on how portfolio budgeting and capital budgeting systems could be implemented at the federal level and how they might ultimately foster balancing the budget. the ideas that i've discussed here and others are included in a discussion draft for budget process reform that our committee is releasing today and each of you will have the opportunity to pick up a copy on your way out. we invite anyone and everyone to share that i know insights and input and to take part in this important initiative. there are
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items within our proposal that are certainly controversial or may elicit serious concerns and that's fine, that's healthy, we ought to have that discussion, we welcome in and all feedback. at the end of the day our , motivation is not the process, but the product. how do we create a system of checks and balances that will ensure we are producing solutions that make our government more efficient, effective and accountable to the american people. the congressional budget process is really just a means to an end. the end is a nation that is miss daily sound, economically healthy, safe and secure and full of opportunity. today's budget process is failing the american people and our nation and we must and we can turn that page and hopefully this proposal provides the impetus for getting us moving in a better direction. let me once again thank brookings and the committee for responsible federal budget for their sponsorship in innviting me today. thank you so much. god bless. [ applause ]
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>> thank you very much indeed, mr. chairman. thank you for laying out these very comprehensive proposals, as you said there are copies at the back for everybody to have a look at when they come out -- when they leave. i know you have to leave and i know you have time for just one quick question from the moderator. i know also that given that at this early stage in the nomination process it can't be about hhs or health care. let me ask you this. the driving force on the house side of discussions of budget process reform, as evidenced from your comments here today. if things go as you hope you will be -- you will be through the process and you will be leaving the congress and the committee. in that eventuality how can you assure us that the , momentum for budget process reform is going to continue in the house? >> it's a great question and the
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good news is that this isn't just a tom price effort. this effort grew from frustration literally on both sides of the aisle about the budget process. there isn't anybody that's happy with what's been happening from an appropriations and budget process in congress over the past couple of decades and so the work product that we've produced today is from our committee staff and the input that we had from members and from folks in the think tank community and ideas that we had, but we are not -- we are not wedded to just that and that's the good news because what we want is the input from everybody. i believe that there will be somebody -- if i'm given the privilege of moving to a different position, that there will be somebody or bodies in the house of representatives who will pick up the mantel. this is so important. this is so incredibly important. the house republican conference has embraced the idea of budget process reform and so i have all
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the confidence in the world that what will happen moving forward is that hopefully this will begin that serious discussion so that within the next two years we will be able to have a piece of legislation that we can move through the congress of the united states. >> i hope you are right about and -- that and thank you again for coming this afternoon into thank you. please remain seated. >> i have great pleasure in handing over to my mcginnis to the committee for responsible federal budget who is the co-host of this meeting today and please if the panelists will start to come up. meyer has been in charge of the committee since 2003 and she's focused on budget process issues and the budget and economic -- economic issues for many, many years not just at the committee but at the new america foundation and earlier at the brookings institution.
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so i'm pleased to hand over to her to conduct the panel. thank you. >> thank you so much. thank you, stuart, for putting this panel together. ok. camera people, you cannot leave. i know you're here for budget process. great to have so many cameras interested in budget process. okay. well, i'm really excited to lead the discussion with a great panel but also really a great product from dr. price and his staff from the budget committee that's here that's put together something i really think is worth discussing. many, many times budget process -- i'm going to be honest -- is used to avoid talking about the policies. a lot of people use it to avoid actually confronting the fiscal policies that we are going to have to grapple with and that's not the case in this process, i believe. it's actually put together -- i think the other thing that you sometimes see with budget process is it becomes a random grab bag of all sorts of ideas that have been sitting on shelves for two decades, this he
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-- they throw them in there. but this is actually, i think, and i will be interested to hear what the panel thinks, kind of a thought out whole process where the budget would be looked at more comprehensively and it's a chance to address some of the questions that dr. price brought up, whether it's missed deadlines to gimmicks to poor fiscal outcomes, i think there is a real method to it and i think it's the beginning of confronting all of those policies. i also this i that dr. price has a lot of credibility on this because he has also worked deeply in the policies that are affected by the parts of the budget that he's looking at to reform. it's not instead of, it's in addition to and i think he has a lot of credibility on that. so we have a great panel today. we are also going to have time to have a discussion with the audience because i see a lot of budget experts here today. so i'm just going to quickly go down, i think everybody knows who we have, james wallner, harry stein from the center on american progress, phil joyce from the university of maryland public policy school and david wessle from here at brookings. also this is the kind of moderator i am, i'm going to ask
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those broad questions and i encourage you to answer whatever question you had wish you had been asked instead of the specific one. i think we should just have a discussion and i think you should jump in and talk with each other as well. but i guess i would start with it is important when you're thinking about budget process what problem are you trying to solve. and there are plenty of people who say, you know, it's not t he process that is the problem. it is the people. >> the problem is the problem, not the people. i almost blamed it on the people. sorry. it's the problem that's the problem. i think there is a lot of problems with the process, but do you think the process needs to be reformed and what are the biggest problems you would want to solve through budget process reform? >> first thank you to brookings, stuart and maya and the committee for a responsible federal budget. i want to commend chairman price and the budget committee for putting together a great proposal, there are a lot of good ideas there, a
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lot of refreshing stuff to see. you know, i would just start off by saying i might be one of the people who thinks that the process is a bit of the problem but the people or the problem is also the problem so maybe it's good to start with me. i'd like to just take a step back and share with you how i try to approach these issues and assess the future effectiveness of any proposed reforms and i think that does require us, first, asking what do we mean when we think about and talk about the budget process. and for me, that's just a set of rules and procedures that governs how congress makes fiscal decisions at least in theory, right, and it comes from the same place that all of the other rules in congress come from, article i, section 5 the rules of proceeding clause in the constitution. the reason why i think that's important is the implication of this is that factors that are negatively impacting the budget process should also show up elsewhere and i think if we were to ask any of you in the audience you would likely say that nothing in how congress is making decisions today is
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actually working very well. and i think that is not a coincidence. i think a lot of the same factors that are negatively impacting the budget process are negatively impacting the legislative process more generally. and this reflects, i think, a more general inability to form sufficient coalitions that are willing to take the votes necessary to pass public policy on a sustained basis. that's the fundamental problem we are looking at today. it isn't a rules problem per se, although that is certainly part of it and i think the rules can be more rational and more efficient but it is a problem of political will. pure and simple. that's it. and the reason why we're talking about budget process reform so much lately is the problem has gotten bigger and it's gotten harder for members of congress and both parties to show some sort of willingness to tackle that problem and so here we are. i would just say that the effectiveness of these proposed reforms should be assessed in this light. that doesn't mean
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that reforms that don't increase the political, you know -- the cost of ignoring the problem are bad, but it's not necessarily going to solve the problem. so biannual budgeting makes a lot of sense but we are not passing appropriations bills in the house and senate for a lack of time. i mean, i think it's important to keep that in mind. you know, broadening the programs that are subject to automatic budget enforcement, also a very good idea, but the current automatic budget enforcement of the budget control act on a narrower subset of less salient programs isn't to keep that in mind. being allowed to go into effect, we typically waited. -- wave it. another thing to keep in mind. again, these problems i think are very important, very good proposed to tackle the problems that we have but it's a fundamental lack of political will on both sides of the aisle to tackle the long-term fiscal problems of this country that is leading us to have this discussion. >> all right. thank you. harry. >> i think it's a good question.
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and i think that, you know, to me when i look at budget process reform i don't think that , fundamentally the budget process is the problem, i think that the budget process currently can work when members of congress want it to work and when they're able to work together. now, that said there are certainly issues with the budget process and there's ways to make it work better. i think that one example in here that i think is positive from chairman price's proposals is eliminating the term limits for members of the budget committee. i honestly did not know that rank and file members of the budget committee were term limited. i think that generally term limits make it harder for members to build expertise on the issues they work on. that is a good first step. hopefully that leads towards getting rid of the term limits on economy chairmen in the house which i think would be a positive step forward. but the fundamental thing that i want to ask on budget process that is a good first step. reform and government reform more generally is does this make government more responsive, accountable and transparent for the american people?
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as chairman price said, we just had an election where it's very clear that people feel like washington isn't hearing them and they want to do things differently and, you know, i think it's important to note here that there's actually some very good political science research that shows that those people are right. martin and benjamin page did a study looking at this and there's this depressing quote in there that after you control the preferences of wealthy americans and the preferences of interest groups, ordinary americans seem to have absolutely no impact at least nothing statistically significant or observable on public policy. and that's -- that's just -- should be phenomenally depressing and we should have a budget process that works to solve that problem. now, unfortunately and i think the most important of price's proposals that is going in the wrong direction and this was the having caps on debt as a share of the economy that decline over time and are enforced by across the board spending cuts. so basically sequestration but
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sequestration for medicare, medicaid, and social security. those programs are extremely popular with the american people, the american people support expansion over cuts for social security, they support protecting medicare over cutting medicare to reduce the deficit. the wealthiest americans have the opposite opinion, they tend to support cuts to medicare to reduce the deficit. now, people can disagree on this from a policy standpoint but that's where people stand. we should note there's no fiscal arithmetic that forces cuts to these programs. stabilize the debt as a share of the economy over the next 30 years entirely with tax increases and we would still be a low tax country by international standards. now, you don't have to support that policy, but to say that we have to cut medicare because of fiscal math is simply not true. what worries me about what chairman price has laid out here is it sets up a system where members of congress can vote for large tax cuts and then they can vote to reduce the debt and they never actually have to vote on
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cutting medicare, medicaid and social security. so, for example, president trump -- president-elect trump has proposed tax cuts that cost $6 trillion over ten years, i ran the math on this during the election, paying for those with an across the board cut includes $1.7 trillion in cuts to social security, $1.1 trillion in cuts to medicare. you would reduce the average monthly social security benefit which is only about $1,200 a month, you would reduce that by about $170 a month. people with disabilities, retirees and people on fixed income and you will take away $169 a month from a low amount of money they have. people can disagree on the policy on that but they should have to vote on that. this is creating a process where the accountability for that choice is divorced from the people who are making it and i think that's a fundamental mistake for budget process reform. >> so i will start by just not amplifying very much because i agree with the prior two speakers that the fundamental
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problem that we have is not primarily a problem with the structure of the budget process, it's a problem with the operation of the budget process which does not mean there are not reforms to the budget process that could create incentives for the budget process to operate in a sort of different and more timely way. the second thing i will say is that this is a serious effort that there were these nine hearings that were held and i testified at three of those hearings which is not what makes it a serious effort by the way but it doesn't hurt. >> the other six hearings were horrible i hear. >> right. exactly right. i'm not sure if i'm 3 of the 30 witnesses or only one, but my point is that, you know, based on the number of members that were in attendance, the kinds of questions that were asked, you know, these were -- this was a serious effort and i think this is as mike suggested a proposal that hangs together which doesn't necessarily mean you need to agree with all of it, it
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simply means that, you know, often you do get a sort of hodgepodge of different ideas that are thrown together as if they are a unified proposal. i actually think this is a unified proposal. if i were going to identify the things -- and i think some of them are things that this proposal really does address that are the most fundamental problems with the budget process, i guess i could list, you know, 10 or 15, but i will stop with two and those two would be the timeliness of the process and i think if we want to talk about trust in government, why would the citizens trust a government that has only managed to enact appropriation bills on time four times in the last 41 years? you know, they may not know exactly what's going on but every time a new spade of stories comes out about how we have to have a budget agreement on appropriation bills by x date or we're going to have a government shutdown. at some point it doesn't matter
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whether we actually have a government shutdown or not, it's a sort of demonstration that the congress and the president can't do their jobs. so to the extent that anything in here is creating incentives for the congress to actually get its work done on time, i think that's actually the most important thing that could be done. the second is on this question of whether we should have targets or not, i think the question of whether the targets should be as harry suggests, there should be a lot of debate on that. the question of whether there should be a target, i'm on the side of saying we ought to know where we're trying to get to and that a lot of countries around the world have what's usually referred to as a fiscal rule and a fiscal rule simply means that we have an overall sort of macro level goal for where we want the budget to get to and whether that's a percentage of gdp or something else it would be useful to know where we are trying to head and then there can be all kinds of debates about how it is that we get there.
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we don't necessarily have to get there by cutting spending, we could get there by increasing taxes. if you had some kind of consensus which we lack and we have lacked for a long time on what the overall goal for the budget process ought to be, i think that would move us a long way toward at least knowing where we're trying to get to and then figuring out how we're going to get there. and i will stop there. i will save my other comments for later. >> thank you all. i'm tempted to say i agree with everything and we should go home. so i don't think that the -- i think that the -- the reason we worry about this is not because the process is messy. if we had a budget outcome that we were more comfortable we would tolerate a messy process. i think a lot of us aren't comfortable with a process as if we had a budget outcome that congressman price said wherein -- where and increasing fraction
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of the federal budget is kind of on autopilot, although i think contrary to what the chairman said congress can and often does tinker with medicare and medicaid so it's not like they really don't have any power, but in general too much of the budget is not getting annually reviewed and too much of the pressure on the budget are things that we think of as investments in the future. so there is a problem with the outcome which then should lead us to look at the process. secondly, i do think that if congress wanted to make the current process work they could . and i think it's nice, but naive to think if we had just different rules and some of these are very complicated that somehow congress would say a-ha we really meant to play by the rules, now that you've made them complicated and a little bit stricter and put all these laws in place that now we're going to behave, i just don't think it's going to work that way. third, i do think that congressman price and the people who worked on this thing did identify a number of issues that really need to be addressed and one of them as has
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been said is just our absolute lack of long-term focus which i don't look at as necessarily a question of too much spending or too little spending but just that we don't seem to be able to look beyond the next -- you know, congress thinks they have succeeded if they avoid a shutdown. does not seem like a very high bar for a representative democracy. phil and i and a number of other people have done a little book on thinking more about the long-term that we're going to discuss tomorrow at the bipartisan policy center. i think that they're right to he best right to focus on this. but, you know, we have the luxury of being able to look through this to say i studied it would be a strong exaggeration. i want to pick on a cull things to call them to your attention. one is it's very nice to say that if we move the start of the budget year until january 1st that would give congress more time and they would work better. let's remember that congress moved the deadline -- the
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beginning of the fiscal year from june 1st to september 1st because they said it would give them more time and so i'm a little skeptical that if you -- just if you move the thing three months that suddenly everything will be an orderly process. i'm trying to imagine what election time would be like in years where they hadn't finished the budget. do we have this bizarre situation where they're refusing to vote on things because they don't want to do it before the election? i am worried about that. secondly, i'm trying to imagine president trump coming into office and being told by the way, boss, you can't do anything about spending and taxes for 2017 and for half the appropriation bills you can't do anything for 2018. i don't think -- i don't think -- i don't think the president would be happy with that, obviously that isn't congressman price's concern at least not for a couple of weeks, but i don't actually think the american people would be. i think when the american people have a presidential election the president runs on a program they don't want to be told, oh, because we set up this rule they can't do anything for two years. one more thing, maya because there are other issues that are
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really interesting and important in here, but one of them is congressman price when he talked , to us about the budget process was very clear that he was , looking for a neutral process, one that was not sort of pro republican or pro democrat and i worry about whether we have really achieved that here and make two observations. one is if you define the process as harry pointed this out, as too much spending and you basically bias the thing against raising taxes even if people in america would be willing to pay more taxes to get more spending then you don't have really a neutral process. and secondly i feel like this is , a nice conversation but completely divorced from reality when it looks like according to leader mccarthy and others congress is just going to repeal the aca with one reconciliation bill and do a big cut bill with another reconciliation bill so they don't have to really deal with getting -- dealing with very many democrats in the senate. so it kind of feels like we're
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going to talk about this nice process, but before we put this in place we're going to dismantle much of president obama is doing and half of the new deal on the way and we would like to have this level playing field thing. so i think that it's a little bit in contrast with the spirit of the times which seem to be i won the presidency, the republicans have the majority in congress, we're going to do stuff and the democrats better get out of the way because we've found a way, one that the democrats have used successfully i would admit to get -- to avoid needing to get a bipartisan consensus. >> okay. a lot of good thoughts there. i have a couple i'm going to share but just so you know my next two questions coming at you all will be is there something you think we should do for the budget process that's not in here, for instance you talked about long-term budgeting. ofo diving into the issues baselines which is one of the pieces that's interesting in here. just a dumb thoughts as i -- just a couple of all as i was
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listening to all of you with really good comments. one thought i had is i think after this election it's a really important time in this country for rules and institutions and things -- and systems that people feel are fair because we have a more polarized partisan really tough environment than i think any of us have seen in quite some time and we need people to have faith in the processes of government even as our politicians are figuring out how they're going to work through things together. i think the importance of budget process being something that is understood and followed on a regular basis is critically important. i actually think this is maybe a tough time to get it done but an important time for a strong budget process. i was thinking about what the most important priorities you would want it to address are, this one may -- it may address this, i'm not sure, but a whole piece of budgeting that i think is really missing is evaluating our national priorities and figuring out what our biggest priorities are. portfolio budgeting is one area they've talked about which i think would go forward and address that. i think if you have baselines less biased in one direction or another that gives you more
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choices and more chance to revisit the national priorities. i would love to see a process that focuses budgeting on what it's supposed to do, establish what your national priorities are, put in place a plan for them, put a place a plan to fund fund them -- a plane to fund them. so i think this does this somewhat, maybe could do it more. the other one that i have concern about is the fiscal outcomes and i am really interested in the debt targets as a piece of this. i think the debt targets -- i agree and i will talk about this in a minute with your concerns, harry, but i think having a fiscal target to start with exactly like you said, phil, it's a necessary part of a budget. it seems to me kind of crazy to try to put budgets out there that don't have anyplace where they're going. there is no forcing mechanisms for evaluating trade-offs which , are what budgets are supposed to do. debt targets as a share of gdp is important i really like that it switches the debt ceiling to look at debt as a share of gdp which is the right way to think about it, i
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think. but i think having the sequester-like if you fail to hit your debt targets it's only spending targets, i'm all for broadening the base. i don't think putting medicare and social security is a bad thing. of could have to types sequesters. you can have one where you have one that nobody wants to fix. we thought we had that with the sequester. turns out we didn't. so maybe we don't understand what people are willing to do to not make the hard choices. or, two, to get a southwest you through the debt targets through. to have a biased approach doesn't make any sense at all. i thought you could have huge tax cuts and never vote for cuts and entitlement spend issing would not make this plausible to begin with. you want both sides to adopt them and both sides to think the rules are fair. but i do think it is is an interesting time for a whole fresh start for a budget process.
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if we followed the old process, it would be fine. sometimes you need a reset. it feels like the budget needs a major reset. what do you wish the committee did include or would include? and if you have any thoughts on baselines, which is something that has been debated for many. years. >> it is a great question. there was a working paper on this. it was very helpful paper as well. again, i want to take a step back. i think you're absolutely right. i think we should think big. at least in terms on of assessing what kind of system we want. there's no reason to necessarily be bound by the existing status quo. this requires us to think through what kind of process we want, what kind of things we value. there is a tension between do you want a more deliberative decision-making process that may
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be politically and public portal perilous for its members. they have to take top votes, right? but it does deliberate. it does arrive at stable outcomes. but it will be more difficult to get change. it may take a while. you may get decisions more quickly, but they will be less table and maybe more one-sided. the fundamental process we have, it is within all areas of congress, in my opinion. and i think you see this in the election in what motivated millions of americans around this country. they are not seeing their claims adjudicated in the halls of congress in the floors of the house and senate. they are being told lots of stuff when they're politicians or the candidates are asking for votes. they're told we can't do this because this happened or we can't do that because that happened and all of this other stuff.
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it's frustrating. processing through this and it may not be the most , glamorous thing, it is important that we think through what kind of process we want is and what kind of things we value. make members of congress a little less secure like twirly. the last i checked, congress wasn't designed so members could come back year and year and year on an easy basis. it is is designed to represent the people. and i think it's clear that the people aren't getting what they want right now. i would just leave it at that. >> i'm going to let someone else weigh in on the baselines. i think the one thing i really like which i said is to have a long-term goal. it is not to say we have a long-term goal for debt-to-gdp. and everything else doesn't matter. for instance, in the budget
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review, they talk about goals for other things as well. i think it is is important to put the budget in economic policy in general. the goal is not to have only and congressman price said this well at the end. to have a growing economy and equal opportunity for social mobility and stuff. so i think if we're going to do long-term planning we have to have something that says more best something more than just says nothing more matters than the debt to gdp. we have learned the hard way that automatic stabilizers in the budget are really important. that you want some spending when the economy hits a rough spot and then contracts when the economy gets better. we have some automatic stabilizers. some of us feel one of the lessons of the great recession is we didn't have enough and we ought to be thinking about expanding those.
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you can't count on congress to do fiscal stimulus when needed. also, the stuff doesn't always trigger off when the economy gets better i would want to make sure any budget process we did didn't stop us as automatic stabilizers. that is more people are going to be on food stamps when we have a great recession. more people are going to be on medicaid when we have a great recession. we want to think about getting more monies to state and local offset the to cutbacks when their revenue is down. if you think of everything as we have to put a cap on everything because otherwise it's out of control, i worry we will be setting ourselves up to make the business cycle much more severe than it is. it invites then congress to -- you hope congress will wave those things when we he have another great recession. i'm not sure that's actually going to put us in a better place. click there are things were you think, i have to clarify how this works.
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any point, you have to best you can step in and say, we do have automatic stabilizers. >> it is always a really fun day when a top fabric gets to agree with something the heritage foundation said. >> this that happen often to you, harry? >> i have some days more than i used to have. it is is really important is the idea that the process -- people should be able to see the process a adjudicate in competing claims. they don't see that's enough. one thing that is important in these discussions is probably it needs to be broader in budget process and think overall about congressional process. i think a lot of the problem with not seeing claims adjudicated is when amendments aren't allowed. so there is just one vote, and members have no opportunity to offer amendments.
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this is not a partisan problem. it is a problem for government. i have no objection. it is a good thing to be clear when you are discussing your budget. what your goal is fiscally and what your other goals are. when the president's budget comes up, you can see where his budget would go with the economy best debt over share of the economy over time. when congress puts it out, you can see their resolutions and a fiscal goal they are trying to reach. and you can see in the current law where we're going now. where i think you don't see claims adjudicated well and when the process starts to break down is when you start divorcing them from the question when we get there. that is the problem with an enforceable goal. it is much more biased when it is only across the board
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spending cuts. i don't want to see across the board tax increases either. i want to the see members of congress think through the tax code and identify policies that work against the fiscal situation and to support the government that they want to support. and when you divorce these decisions from each other, it is easy to vote for a goal and say figure out later how to get there. and at the core of a lot of this i think is this theory that congress doesn't compromise because they're not being forced to enough. and i think that's probably incorrect. in fact, we tested this with the sequester . before that even. in 2011, president obama, i think it was a mistake this, used the debt limit to force debt reduction. instead we got the control act. -- the budget control act which had discretionary spending caps that did not address the drivers of the debt. and then the sequester process
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was supposed to be so horrible that would force the super committee to design something better. i don't think sequester for social security, medicare or middleclass taxes is a great way to go in the future. and so something that i wish i did see here, i do agree that thinking about debt as a share of gdp is the way to think of it. and it's good to see the chairman thinking about ways to make the debt limit more rational. i would be concerned with doing that in a world where you're in gdp ission and dgp -- shrinking. you may increase even if you don't get there in nominal terms. a default crisis at exactly the worst time to be dealing with that. there is no reason for the debt limit. there's no purpose that that service. if you vote for spending and you vote for revenue policies, there shouldn't be any question that you will pay the bill when it comes to do. it used to be the debt limit was a way to embarrass the party in
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charge. ultimately we pass the debt limit. it changed into something that was taken as a hostage where , there was something you had to get in return. that is very dangerous. we almost defaulted several times in the last couple of years. and i think we need to get out of that situation for future administrations. whether that means abolishing or thet limit altogether president can offer us a debt limit increase without congress. congress has the ability to disapprove. and there's no hostage taking. again your linking spending revenue and debt together rather than saying we will have a vote just on debt without acknowledging the policies that got us there. >> just before you go, because i want to just disagree with you on one thing. it is more interesting to have a panel where there is some exciting disagreement. i maybe wrong.
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does makeink congress many hard decisions unless they are forced to these days. the way we legislate is by the last minute. sometimes what we are trying to do is create forced moments. last year we had an sgr fix as those only came because deadlines were hitting. i am trying to think of winfrey recently congress has made any hard choices without some kind of forcing mechanism. americans don't want to see more threats of government shutdown. it is been a positive thing that over the course of the obama administration, enough of these cliffs have been resulted that we no longer have two budgets
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they finds. we have one. that works. there's no need for an alternative fiscal scenario. hope it stays that way. current law is reflective of where we think the laws are. and the affordable care act. there was no forcing mechanism there. it expanded health insurance coverage and more people have coverage. the law reduced deficits. that deficit reduction grows over time. the affordable care act and the overall slow down in costs,the w which seems to be partially due to the aca, but also the reforms that the aca made directly in medicare in particular, total spending on federal health programs in is less than cbo 2016 thought it would be in 2009. think about how amazing that is. in 2009, were talking about medicare and medicaid. now we have medicare, medicaid, affordable care act. and we're spending less money than we thought we would covering 20
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million more people. that requires more choices -- hard choices. i saw an ad today encouraging congress to repeal demonstrations under the affordable care act. they took a -- the advocates of the affordable care act to be a lot of flak for the cuts in medicare. they were genuinely hard choices. people opposed those choices that represented real lawmaking. >> i'm going to hope to get the congressman to weigh in when he wants to. >> i'm the only one in congress here. >> so is in terms of just following up on that directly, you know, in terms of things that i would do differently or things that i would add to this that aren't here, one of them >> has to do with the debt ceiling. i agree completely with harry that i would just get rid of the debt ceiling. and whatever we think about action forcing mechanisms and whether they're a good thing, playing russian roulette with with the u.s
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